Shenguan Holdings (Group) Ltd. provided consolidated earnings guidance for the year ended December 31, 2015. The board of directors of the company informed the shareholders of the company and potential investors that based on the preliminary assessment by the board of the unaudited consolidated management accounts of the group and the information currently available to the board, the group is expected to record a decrease of approximately 45% to 50% in its net profit for the year ended 31 December 2015 as compared to that for the year ended 31 December 2014. Such decrease is primarily due to the following reasons: During the Reporting Period, the decrease in revenue was mainly caused by: the decrease in sales volume due to the influence of the macro environment in the PRC, the competitive environment has become more intense, and the restricted growth of the sales of meat products; and the decrease in average selling price due to the overall decline in prices of the products in this industry.

As mentioned above, the decrease in average selling price caused a drop in the gross profit margin during the Reporting Period as compared to the Previous Period. To enhance the productivity, the group discarded certain non-efficient production lines and equipments, and demolished and reconstructed an old office building, incurring a loss after tax of approximately RMB 23,000,000 from the write-off of fixed assets.